India is an important market for Intel

July 4, 2012 — INDOLINK Consulting (es)

Source: The Economic Times, Jul 03, 2012

Mumbai: The world’s largest computer chip manufacturer now diverts a high proportion of its think tank towards phones and portable devices because the internet has transformed the use of computing gizmos, said Intel Inc’s chief financial officer Stacy Smith.

A chunk of the Intel’s chip designing for phones and next generation computing is driven by its 3,200 employees in India, added Smith.

“Markets we called adjacencies are now going to the core of our business, like cars, security systems, tablets phones etc. We see our business now as having two different thrusts,” Intel’s CFO said in an exclusive interview with ET.

For several decades Intel has made microprocessors for desktop and laptop computers for all major brands around the globe, including Lenovo, Dell and even Apple. In April, Intel’s first cellphone hit the market in partnership with India’s mobile manufacturing firm – Lava.

The Xolo as the cellphone is named currently sells at 22,000 a piece. India is set to be among the top five markets for the company by 2016.

Smith said, although India is a key market for Intel, the focus will remain on the computers – desktops and servers – for the country. The launch of Intel’s first phone here is a mere coincidence coupled with very limited customisation on the part of Lava. “In India, that’s what happened, the customer took in essence what we were offering,” he said.

Subsequently Lenovo has launched an Intel phone in China and Orange in Europe. “We have been targeting our development on the high performance low power devices, we’re there today. The device that is shipping to India now isn’t even based on our most leading edge technology and it is outperforming almost everything that is out there in the market,” Smith said.

“Smartphone space for us will have two offerings: One for high-end users and one for lower-end, high volume phones. Right now the push is on winning designs. Let’s build credibility with customers, understand what people want. We will make money at some point, but that’s not now.”

Intel’s revenue from just the mobile segment was $4 billion in the year gone by and is expected to hit $5.5 billion this year, Smith said.

While all the research on cellphones and mobile devices is making its way into desktop and laptop technology, Smith said the chip sets are unlikely to converge. “I see them as being separate product lines. You have the Atom that will go into low-power kind of devices, the core i5, 7 in these (Ultrabook) kind of devices, Xeon that will go to servers,” Smith said.

“We are already seeing the focus on phones is benefitting the computer segment. Fine grain power technologies are an example. Historically that has not been important for laptops, but some of the tricks we have learnt on the phone side have worked their way to the core technology.”

Intel’s first fourth generation, or 4G, LTE technology phone is currently being sampled for a launch early next year, in the US. Intel has also forged some foundry contracts with Achronix, Tabula and Netronome, apart from its silicon chip manufacturing. However, Smith said those remain small. “We are doing very small agreements for small companies. We are learning what it takes to build out process technologies, learnings that may build up some big options later.”

Meanwhile the focus remains on selling microprocessors. In India, Smith is confident the boom will come irrespective of business environment or even internet broadband penetration that is likely to be setback by policy uncertainties, caused as a result of the 2G scam.

“It is a relatively simple phenomena you saw a dramatic increase in people who had PCs in China. We expect the same thing in India, where it will be less than two months of income for someone to own a PC; and we see market after market where this happens. We see the ownership of the technology goes up as it is a highly desirable technology.”